How to navigate your way to a lower Swiss tax bill
Think Swiss watches are complex? You should see their tax system! With four-tiers of tax burden – federal, cantonal, municipal and church taxes – working out how much you'll have to pay can be a rather bewildering and time-consuming process.
Then there are those bizarre quirks you only come across in Switzerland – where else are you only allowed to lodge one tax return per household? For international residents, it can all seem like too much.
That said, there are some fairly simple ways to ensure that you pay lower taxes in Switzerland. Where you live is, of course, crucial – but so are a few other less obvious factors. In partnership with Tax Jungle, a new site for calculating Swiss taxes based on your exact personal circumstances, here are five things to consider to keep your tax bill low.
1. Location, location, location
Much of your Swiss tax burden is divided between, cantonal taxes – that is to say, a tax that goes directly to your canton of residence – and municipal taxes. Cantonal taxes may cover infrastructure, education and healthcare, while municipal (or communal) taxes may be more focused on local social services. It’s good to know where this money is going, as you’re likely to be paying a fair amount!
The tax rates for these two vary wildly across the country. Using the Tax Jungle tool, for instance, you can see that it’s not just a question of picking the right canton to take advantage of lower taxes, but the right town or village. Whether you want to spend to treat yourself or save to build for the future, the money you'll have left after your tax bill could vary greatly depending on just a relatively small distance!
Before moving to Switzerland or embarking on a cross-country move, carefully examine the area you’re looking at – can you save money depending on where you’re willing to live?
2. A question of belief
It may seem rather personal to be asked whether you're a member of the three main churches in Switzerland – the Roman Catholic, Old Catholic and Lutheran churches. However, the way you answer the question is important. Like the other German-speaking countries, church taxes are levied to support the functioning of these organisations and roughly three quarters of the Swiss population choose to pay these taxes – up to around 300 Swiss francs a year.
Photo: Getty Images
If you’re not a believer, simply mark ‘none’ on your paperwork as you register. If you've already ticked a box to say you are religious, you can always amend it with the authorities – but it may take some time. If you’re smart (and lucky), you could also choose a canton that doesn’t levy direct church taxes, such as Valais, Vaud and Ticino. Just be sure not to praise the Lord when you see how much money you’re saving ...
3. Be a canny commuter
Switzerland isn’t a huge country, even by European standards. Some cantons can be crossed by foot in less than half an hour. It’s also a country serviced by excellent public transport. This gives the canny commuter a range of options when considering where to live – it doesn't have to be next door to your office.
Using a tool such as Tax Jungle allows you to compare a range of municipalities to find the one with the lowest overall tax rates. Adding an extra 15 minutes to your commute from commune to commune could save you hundreds of francs per year in taxes, while also giving you access to a broader range of social services – some communes offer a lot more than others.
4. Family matters
While we’d never advocate having a family simply for tax purposes (they tend to cost quite a bit of money, after all), those married or with a family will find that they pay lower taxes when it comes to those taken at the federal, cantonal and municipal level.
This echoes the trend across many European countries to lower taxes for married couples. This is an important consideration for expats when deciding whether it’s affordable to bring your spouse and children with you if you're starting a new job. Switzerland has its share of cross-border commuters. But if you have a family, bear in mind that Switzerland does offer you some favourable tax treatment.
Combined with the tax savings that picking the right village can provide, this can make a huge difference to those coming to work in Switzerland and the standard of living they enjoy.
5. Use the right tax comparison tool
Whatever your circumstances, the new Tax Jungle website aims to be the simplest and most comprehensive tool to enable people living in or thinking of moving to Switzerland to calculate their potential taxes.
While other tools, such as that created by the Swiss federal government, give an overview, Tax Jungle users can enter their exact salary, marital status and other details to specifically locate the areas with the lowest tax rates for their own needs. It's available in English, as well as the four official languages of Switzerland (German, French, Italian and Romansh).
With just a few simple personal details, you can quickly find the kind of granular detail that you’d usually have to pay for – helping you make the best choice for your unique circumstances.
Moving to Switzerland or thinking of moving within its borders? Head over to Tax Jungle today to get a detailed comparison of the tax you'll pay depending on your personal circumstances and where you choose to live.
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